Interest on Portugal’s sovereigns rises

Interest rates on Portugal’s 10-year bonds have risen to close to 2% after years at near zero rates.

Rates on Tuesday climbed to 1.9% in a session in which in which the bonds of other Euro Zone countries were also under pressure as investors look to an aggressive European Central Bank policy to control inflation.
The ECB has been unwinding bond-buying support at a glacial pace, far slower than its peers, worried that growth could quickly crumble as the war in Ukraine, sky-high energy prices and the risk of losing access to Russian gas batter an already fragile economy.
The yield on Portuguese 10-year bonds — the benchmark period for investors — went up to 1.928%, the highest value since 2018.
For five-year bonds the interest rate is the highest since September 2017, with bonds trading with interest rates of 1.91%. Two-year bonds are currently trading at 0.358%, the highest since May 2017.
Germany, France, Spain and Italy also saw interest rates rise on bonds in secondary markets.
Analysts explain the increase in interest rates on European bonds on the expectation that the ECB will instigate a more aggressive interest rate policy to try and contain rising prices in the Euro Zone, and the lack of commitment from the ECB to alleviate the upward pressure on interest rates on European debt.
The ECB confirmed last week that it would end its bond purchase programme in the third quarter of this year.

Photo Joaquim Morgado: Cristina Casalinho Head of Portugal’s public debt agency IGCP.